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Introductory Finance Ratios

1. Ermy corporation has ending inventory of 682,173 and cost of goods sold for the year jsut ended was $6,487,318. What is the inventory turn over? THe days' sales in inventory? How long on average dud a unit of inventory sit on the shelf before it was sold?

2. Boyd Inc, has a total debt ratio of 0.45. What is its debt-equity ratio? What is its equity multiplier?

3. Crabtree inc had additions to retained earnings for the year just ended of $625,000. The firm paid out $130,000 in cash dividends, and it has ending total equity of $7.2 million. If the company currently has 570,000 shares of common stock outstanding, what are earnings per share? If the stock currently sells for $29 per share, what is the market-to-book ratio? The price earnings ratio? If total sales were $10.5 million, what is the price-sales ratio?

4. If Phone INc. has an equity multiplier of 1.35, total asset turnover of 1.64, and a profit margin of 7 percent, what is ROE?

5. Jiminy Cricket Removal has a profit margin of 8%, total asset turnover of 1.16, and ROE of 14.30 percent. What is the firms debt-equity ratio?

Solution Preview

1.

inventory turnover for the company was:

inventory turnover = $6,487,318 / inventory
= $6,487,318 / $ 682,173 = 9.51 times

days sales in inventory = 365 days / inventory turnovers = 365 / 9.51 = 38.38 days (average)

2.

total debt ratio = total debt / total assets
0.45 = total debt / (total debt + total ...

Solution Summary

Introductory finance ratios are ending inventory is discussed. Price earnings ratios are provided.

$2.19